ISLAMABAD: Chairman Federal Board of Revenue (FBR) has been approached to remove discriminatory enforcement against millions of taxpayers in provinces of Sindh and Punjab by collecting disputed/ controversial tax on immovable properties under Section 7E of the Income Tax Ordinance, 2001. Pakistan Tax Bar Association (PTBA) has made a presentation before the tax authorities in this regard. The issue has been repeatedly raised by country’s real estate expert Muhammad Ahsan Malik, but in vain. According to the PTBA, they, being the representative body of tax fraternity, have received large number of representations from the district tax bars operating in Punjab and Sindh provinces, regarding issuance of notices at the end of the field formations pertaining to section 7E of the Income Tax Ordinance, 2001. However, no similar activity appears to be under way in other parts of the country, giving rise to serious concerns regarding inconsistency in implementation and enforcement. READ MORE: FTO denies tax relief on deemed income from immovable properties The succinct statement of facts regarding Section 7E inserted vide Finance Act, 2022 revealed imposing a tax on resident persons on deemed income at 5 percent of the fair market value of capital assets situated in Pakistan (effectively one percent on immovable property held on the last day of the tax year), subject to specified exclusions, on which the said section shall not apply as mentioned in the section ibid. The newly inserted Section ibid, was challenged by the stakeholders before the High Courts of the country in writ jurisdictions, on the grounds, inter alia, the levy is beyond the constitutional competence of the Federation, alien to the scheme and spirit of the Income Tax Ordinance, 2001. It is submitted that the vires of the said Section were examined and adjudicated upon by various High Courts, as detailed below: Sindh High Court (SHC): The High Court declared the provision of Section 7E, fortified with the judgment of Supreme Court of Pakistan in Elahi Cotton Mills v/s FOP, reported as 1997 PTD 1555 intra vires vide order dated 28.10.2022 in the case 1141C1.11SONS reported as 2023 PTCL 118. Lahore High Court: LHC allowed all the petitions, declaring the provisions of Section 7E of the Income Tax Ordinance, 2001 as ultra vires vide order dated 06.04.2023 in writ petition No. 52559 of 2022 titled as (Muhammad Osman Gull. Versus Federation of Pakistan etc) reported as (2023) 127 TAX 511 (II.C. Lah.). However, in intra court appeal before the division bench of Lahore High Court, the order of the Learned Single Bench could not stand the test of appeal and has been set-aside vide their order dated 15.02.2024 in ICA No.35908 of 2023 titled as Commissioner Inland Revenue Versus Muhammad Osman Gul reported as (2024) 129 TAX 364 (MC. Lah.) Islamabad High Court: The court in Writ Petition No.213/2023 titled as: Waheed Ashraf Versus Federation of Pakistan, etc reported as: (2024) 129 TAX 329 (TLC. Isl) vide its order dated 19.02.2024, declared the provision of Section 7E as ultra vires. Peshawar High Court: The court in writ petition No.5327-P/2022 titled as: Latif Kareem Verses F.O.P & others reported as: PTCL 2024 CL.281 vide its order dated 23- 11-2023, declared the provision of Section 7E as ultra vires. Balochistan High Court: The court in the case titled (Quetta Chamber Vs F.O.P) reported as (2024) 130 TAX 102 (II.C. Quetta.) vide its order dated 31.05-2024, declared the provision of Section 7E as ultra vires. However, that all the stakeholders viz. a viz. petitioners and the tax collectors sought intervention of the honourable Supreme Court of Pakistan, against the judgments of all the High Courts of the Country. The hearings in the then Supreme Court were started in March-2024, but there is no final outcome of the same till to-date. It is worth mentioning that the operation of the orders of KPK, Islamabad & Balochistan High Courts have not been suspended by the Supreme Court. Following the 27th Constitutional Amendment, the appeals now stand transferred to the Federal Constitutional Court and remain pending. As the orders of the High Courts of the Province of KPK and Balochistan as well as Islamabad High Court are still in field and the operation of the same has not been suspended by the Supreme Court of Pakistan, so the taxpayer falling within the territorial jurisdiction of the same are neither paying any tax u/s 7E, nor the department is pursuing recovery. Due to the relief granted by certain High Courts, taxpayers in those jurisdictions have not discharged any liability u/s 7E. Conversely, taxpayers in Punjab and Sindh are being compelled to comply, despite Section 7E being a federal levy applicable uniformly across Pakistan. The notices under various provisions of Ordinance, viz. a viz. Sections 120(3), 176, 122(1) & 122(5A) of the Ordinance, are being issued to the taxpayers to absolve their obligations in terms of payment of tax u/s 7E of the Ordinance. It is of immense importance that for filing of return u/s 7E, the return is required to be revised in terms of Section 122 of the Ordinance. In the light of facts narrated supra, it is submitted that Income Tax is a Federal levy and the same is applicable across Pakistan without there being any discrimination. The judgments of the honourable High Courts, are in field on account of tax u/s 7E of the Income Tax Ordinance, 2001 and the operation has not been suspended by the honourable Supreme Court of Pakistan. The picture emerges that the tax ibid, is not leviable in the territories of Islamabad, KPK & Balochistan, whereas the situation in Punjab & Sindh is quite different. FBR Chairman would kindly appreciate that asking the tax payers falling in the territorial jurisdiction of Punjab and Sindh to pay tax under section 7E and restraining to take any adverse action against the taxpayers falling within the territorial jurisdiction of Islamabad, Peshawar and Balochistan is neither justified nor in accordance with the true spirit of Articles 4, 8, 10A & 25 of the Constitution. Copyright Business Recorder, 2026